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Market rally getting broad-based for the first time since FY17: ICICI Securities

Since FY17, the market's performance was mostly driven by a handful of stocks, as broader indices underperformed significantly.

December 09, 2020 / 11:50 AM IST
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The year 2020 has been remarkable for the Indian market, not only in terms of steep falls and record highs but also because the rally is becoming broad-based for the first time since the financial year 2017.

In a note, brokerage firm ICICI Securities said 24 stocks have accounted for more than 75 percent of the BSE 100 performance in FY21, so far.

"The tide is turning in terms of the number of stocks contributing to the majority of the index performance (more than 75 percent of BSE 100 index movement) at 24 stocks, which is the highest over the past four years," ICICI Securities said.

The equity market's performance since FY17 had been mostly driven by a handful of stocks, while the broader indices underperformed significantly.

Smallcap and midcap indices have also outperformed largecaps for the first time since FY17, ICICI Securities said.


The normalisation of economic activity continues but the second wave of COVID-19 posed near-term challenges even with vaccine hopes turning into reality.

The market valuation is also turning rich, the brokerage firm said.

"Market valuations continue to turn expensive—it is now above +1 SD (standard deviation) on CAPE ratio, while on the trailing and forward P/E it was already above +1 SD. Market cap to GDP has shot up to 95 percent due to a mix of better market performance and falling nominal trailing GDP. Valuation on P/B is reasonable at the long-term average of 3 times (trailing basis)," said ICICI Securities.

Top picks of ICICI Securities from the largecap space include SBI Life, Bharti Airtel, NTPC, Ultratech, Infosys, Balkrishna Industries and Abbott India.

From the mid and small-cap space, it favours Akzo Nobel, Jyothy Labs, Quess, Prince Pipes and Fittings.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Dec 9, 2020 11:50 am

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